Budget 2024: No GST demand notice to be issued beyond 42 months from the due date of filing annual return; Know how it will help you
The time limit for sending GST demand notices and orders has been streamlined in Budget 2024. Budget 2024 introduced a new section 74A in the CGST Act. Under the new regulations, a GST officer is permitted to issue a Goods and Services Tax (GST) demand notice only within 42 months from the due date of filing the GST annual return. Additionally, GST demand orders must be issued within 12 months from the date of the GST demand notice.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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"This amendment changes the time limit for issuing assessment notices to 42 months from the due date of the annual return for the financial year, and the same shall apply uniformly across all types of taxpayers. For example, FY 2024-25, with the annual return due on 31st December 2025, the deadline for issuing GST demand notices will be 30th June 2029," says Siddharth Surana, Director, RSM India.
Impact of this amendment for GST registered individuals and others
This proposed amendment establishes a uniform timeframe for issuing GST demand notices and orders, regardless of whether the case involves fraud or not. You now know the specific deadline for receiving a GST demand notice regardless of whether it was a section 73 or 74 notice.According to Gunjan Prabhakaran, Partner & Leader, Indirect Tax, BDO India, "As a consequence of this amendment, the common time limits for issuing notices are prescribed, regardless of whether the demand arises due to any allegation of fraud etc or a genuine error/difference in interpretation. This gives the tax authorities a longer time period to issue notices for cases involving errors/difference in interpretation, while reducing the time limit for issuing notices for non/short payment of tax due to fraud etc."
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More NewsWhat were the earlier time limits for GST notices?
As per Surana, under the GST laws, tax recovery proceedings can be initiated under section 73 (for cases without fraud, willful misrepresentation, or suppression of facts) and section 74 (for cases involving fraud, willful misrepresentation, or suppression of facts).You Might Also Like:
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"Previously, the timeline to issue demand notice for a case not involving fraud was 33 months from the due date of filing annual return and 54 months from the due date of filing annual return for cases involving fraud," says Prabhakaran.
How the time limits for GST demand orders changed
As per Surana, the Finance Bill specifies a 12-month time limit from the notice issuance date for completing assessments and issuing orders. For instance, a notice issued on April 1, 2026, for FY 2024-25 requires an order by March 31, 2027, giving tax authorities more time for thorough assessments. "This time limit earlier was significantly shorter and was only 3 months from the date of issuance of notice," he says.Difference between a GST demand notice and a GST demand order
According to Prabhakaran from BDO India, a show cause notice (SCN) and a demand order are separate stages in the tax adjudication process. "Initially when a non / short payment of tax or ineligible claim of credit is noticed by tax authorities, they issue a SCN to the taxpayer, proposing to demand tax on the identified issues (e.g. non/short levy of tax on supplies made, or denial of input tax credit alleged to claimed incorrectly etc) with their reasons and ask the taxpayer to justify its position or pay the tax along with interest and penalty. Then the taxpayer submits a reply, giving justification of the tax position adopted by them and why the allegations by the tax authorities may not be correct and submit the documentary evidence, if any. After considering the reply of the taxpayer, the GST authorities pass an order, either confirming the proposed demand or dropping the proposed demand. If the demand is confirmed in the order, it becomes a demand order," she says.
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This story originally appeared on: India Times - Author:Faqs of Insurances
